The Financial Industry Regulatory Authority (FINRA) said it fined the bank over "significant supervisory failures" for failing to properly supervise its representatives' access to the sounds, and their communication with customers about these sounds.
Deutsche Bank was aware that the hoots might contain confidential, price-sensitive information and that material, non-public information could be communicated through them, FINRA said. However, it ignored "red flags" including internal audit findings and recommendations, multiple internal warnings from members of the firm's compliance department, and internal risk assessments, and failed to put policies and procedures in place to control this, it said.
Brad Bennett, FINRA's vice president said: "Recognising and responding to red flags is the hallmark of proper supervision, particularly in areas involving confidential information. Deutsche Bank's disregard of years of red flags … was particularly egregious given the risk that material non-public information could be communicated over squawk boxes."
Deutsche Bank "neither admitted nor denied the charges, but consented to the entry of FINRA's findings", FINRA said.
Deutsche Bank paid a record US$2.5 billion in fines to US and UK authorities last year over allegations that it manipulated the interbank offered rates (IBOR).
Deutsche Bank said that it would pay £227m ($340m) to the UK’s Financial Conduct Authority (FCA) and a combined $2.175bn to the US Department of Justice, Commodity Futures Trading Commission and the New York Department of Financial Services.
The bank was also the target of the United Arab Emirates largest ever fine of AED 30.8mn (US$8.4bn), for "serious contraventions" including misleading the Dubai Financial Services Authority, failures in its internal governance, systems and controls, and failures in its client take-on and money-laundering procedures.